How to create a profitable business strategy with an index of relative force (RSI)
The world of crypto -trading has seen a significant increase in recent years and has the need for effective commercial strategies. One of the popular tools that can help traders make informed decisions is the relative force index (RSI), a technical indicator developed by J. Welles Wilder Jr.
In this article, we immerse ourselves how to create a profitable business strategy using RSI, which covers its foundations, benefits and proven implementation procedures.
What is the Relative Power Index (RSI)?
RSI is an indicator of momentum that measures the extent of recent changes in price changes in determining excessive or excessive conditions. It is calculated as the ratio of the differences in the prices of the shares for a given period divided by the average price change in the same period. The resulting value ranges from 0 to 100, with higher values indicate more extreme prices.
How does RSI work?
Here is an example of how the RSI indicator works:
- If the price of the shares has increased significantly (above 50), the RSI will be less than 30, indicating that the current price is sold.
- On the contrary, if the price of the shares decreased sharply (below 30), RSI will be above 70, suggesting that the current price is benefited.
Business Strategy RSI
Creating a profitable business strategy with RSI involves the use of this indicator to identify potential opportunities to purchase and sell. Here is a detailed guide:
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- Set your chart : Use a technical analysis platform, such as TradingView, to create a few time frames.
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Cress the RSI indicator: Set the candle chart with two indicators: RSI and another indicator of your choice (eg MacD or Bollinger Bands). RSI should be brought on the same chart.
- Determine excessive and excessive levels : Use historical data to determine excessive and excessive levels for RSI, such as 70-80 for transmission and 30-40 for overwork.
- Type the purchase signal : When RSI passes above the preposition level (below 20), enter a long position in the asset with a stop below the selected level.
- Make a store : When RSI goes back above the tilted level, leave a long position and enter a short order of sales at the same price.
Business Strategies RSI
Here are several popular business strategies that include an RSI indicator:
- Bollinger Band Stradle
: Use Bollinger Bands to generate purchasing and sales signals based on RSI values above 80 or lower 20.
- Long Trend with Low RSI : Identify a long trend in cryptocurrency, then use RSI to determine whether it is benefited (above 80) before entering the store.
- A short trend with a high RSI
: Use RSI to identify short trends in the cryptocurrency and then enter a short sales order when RSI is below 20.
Advantages of using RSI
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- Improved Risk Management : RSI helps to identify excessive and excessive conditions, allowing traders to effectively set orders to stop.
- Increased accuracy : By using multiple indicators in conjunction with RSI, traders can increase their chances of successful shops.
Conclusion
Creating a profitable business strategy with RSI requires understanding how this indicator works, as well as its incorporation into your overall business plan. By following the above steps and combining them with other technical analysis tools, you can develop a reliable business strategy to help you make informed decisions in the crypto -trading world.